2023 (12) TMI 1142 - AT - Central Excise

CESTAT upholds section 11AC penalty despite normal limitation period when wilful suppression found by Commissioner

CESTAT New Delhi rejected appellant's rectification application challenging penalty imposition under section 11AC. The tribunal held that demands ... Seeking rectification of alleged mistakes - No finding has been recorded on the appellant’s submission contesting imposition of 100% penalty under section 11AC read with Rule 25 of Central Excise Rules, 2002 - interpretation of Exemption NN 12/2012 dated 17.3.2012 - Extended period of limitation - HELD THAT:- The appellant contested the impugned order on three grounds- (a) that it was eligible to the benefit of the exemption notification; (b) extended period of limitation was wrongly invoked in the confirming the demands; and (c) if the matter is decided against it, CENVAT credit on inputs may be allowed. Insofar as the extended period of limitation is concerned, the appellant listed the findings of the Commissioner and contested them. In the final order, the confirmation of demands by the Commissioner were upheld. The question of the CENVAT credit was addressed in the Miscellaneous order dated 30.9.2022. Since the confirmation of the demands by the Commissioner were upheld, it was stated in the miscellaneous order dated 30.9.2022 that penalty under section 11AC also needs to be upheld. The ground which is now sought to be raised that since the demands which were confirmed were within the normal periods of limitation, despite the finding of the Commissioner that there was wilful suppression of facts, penalty under section 11AC cannot be invoked was not part of the appeal. The appellant cannot, in the second application for rectification of mistake, now raise a new ground which was not part of the appeal. Extended period of limitation - HELD THAT:- It needs to be pointed out that while demands for extended period of limitation cannot be confirmed where there is no fraud, collusion, wilful misstatement or suppression of fact, demand for a short period of say, one year, can be confirmed even when these elements of fraud, collusion, wilful misstatement or suppression of facts, etc., are present Nothing prevents confirmation of demands for shorter period even if these elements are present. Having found that these elements were present in the case (as recorded by the Commissioner and reproduced in the appeal), if demands are raised or confirmed for a shorter period, it does not mean that these elements are not established. There are no error apparent on record - this application for rectification of mistakes is rejected. Issues involved:The issues involved in the judgment are the imposition of 100% penalty under section 11AC read with Rule 25 of Central Excise Rules, 2002, and the computation of duty by adjusting the cenvat credit available on inputs used in the manufacture of Iron and Steel parts.Imposition of 100% penalty under section 11AC:The Tribunal upheld the demand of duty invoking the extended period of limitation, which led to the imposition of penalty under section 11AC. The Tribunal stated that penalty under section 11AC is mandatory in cases of non-levy or short levy of duty by reason of fraud, collusion, willful statement, or suppression of facts. The Tribunal found that there was no mistake in not giving a separate finding on the penalty under section 11AC as it follows when duty is confirmed invoking the extended period of limitation.Computation of duty by adjusting cenvat credit:The appellant sought to compute duty by adjusting the cenvat credit available on inputs used in the manufacture of Iron and Steel parts. However, the Tribunal found no provision in the Act or Rules allowing duty to be determined after deducting cenvat credit. The Tribunal clarified that if duty is payable, the assessee would be entitled to cenvat credit as per the Cenvat Credit Rules, subject to verification of the availability of cenvat credit.Rectification of alleged mistakes:The appellant filed applications seeking rectification of alleged mistakes in the Tribunal's orders. The Tribunal considered the submissions in both applications, heard the parties, and examined the records. The Tribunal rejected the appellant's contentions regarding the imposition of penalty under section 11AC and the computation of duty by adjusting cenvat credit. It was emphasized that the demands confirmed within normal periods of limitation did not preclude the imposition of penalty under section 11AC.Conclusion:The Tribunal dismissed the applications seeking rectification of alleged mistakes, stating that there was no error apparent on record in its previous orders. The Tribunal upheld the imposition of penalty under section 11AC and clarified the computation of duty concerning cenvat credit. The judgment was pronounced on 22.12.2023.